World View & Market Commentary. Forest first; Trees second. Focused on Real & Knowable facts that filter through the "experts" fluff and media hyperbole. Where we've been, what the future may hold and developing a better way forward.

Saturday, January 7, 2012

Friday, January 6, 2012

While it may not be snowing outdoors this winter, it is certainly snowing in regards to economic data this Kondratieff Winter. The snow is piled high with 200,000 supposed Non-farm jobs “created,” and the yellow snow rate of “only” 8.5%. Both these numbers are above expectations, and no, I don’t believe any of it.

Equities initially zoomed but then retreated to even as I write, the dollar is substantially higher and well above former resistance as the Euro plunges, bonds are higher (hmmm), oil is higher, gold & silver are slightly lower, and food commodities are higher.

Let’s change it up a little and this time start with the chart from John Williams at Shadow Stats. Sure, his unemployment rate calculation is closer to 23% versus the phony 8.5%, but what I want to point out again is that his data is trending upwards, whereas the BLS’s data is trending downward. Gee, that separation of trend has never happened before… why is that?

Now let’s get the spin from Econoplicit:

HighlightsThe latest jobs report shows significant improvement overall and is broad-based. Payroll jobs in December jumped a relatively healthy 200,000 after rising a revised 100,000 in November (originally 120,000) and increased a revised 112,000 in October (previously 100,000). The median market forecast called for a 150,000 increase in overall payrolls. Revisions for October and November were down net 8,000.

Private payrolls again outstripped the total, gaining 212,000 in December, following increases of 120,000 in November and 134,000 in October. Analysts had projected a 160,000 boost in private payrolls.

In the private sector, goods-producing jobs rebounded 48,000 after a 6,000 decrease in November and a 6,000 gain in October. Construction jobs increased 17,000 in November after decreasing 12,000 the month before. Manufacturing employment jumped 23,000 after edging up 1,000 in November. Mining increased 7,000, following a 3,000 advance the prior month.

Private service-providing jobs increased 164,000 in December, following a 126,000 gain in November. The December increase was led by trade & transportation (up 90,000) with seasonal hiring for couriers & messengers (think UPS and FedEx) particularly strong (up 42,000) and retail trade adding notably (up 28,000). Health care continued to add jobs in December (up 23,000). Within leisure and hospitality, employment in food services and drinking places continued to trend up in December (up 24,000).

The public sector continued to decline as government employment dipped 12,000, following a 20,000 decline in November. State & local government jobs contracted 14,000 in December with local education employment falling 9,400.

Average hourly earnings strengthened in December, rising 0.2 percent after no change in November. The latest figure matched expectations for a 0.2 percent gain. The average workweek for all workers in December posted at 34.4 hours, compared to 34.3 hours in November. Analysts projected 34.3 hours.

Today's report includes new seasonal factors for the household survey numbers (payroll data get new factors next month). History is affected back through 2007, leaving some generally small changes in some monthly series. From the household survey, the unemployment rate unexpectedly continued to decline, slipping to 8.5 percent after dropping to 8.7 percent in November from 8.9 percent in October. The consensus expectation was for an 8.7 percent unemployment rate.

Today's report shows the labor market gradually improving. Although improvement still lacks that of the average recovery, the better numbers indicate improved optimism on the part of business expectations about demand. On the news, equity futures rose marginally while Treasury rates nudged up.

Note the downward revision to last month’s miracle… that’s a 17% revision lower, as if it weren’t trumped up enough already. Below is the entire pile of snow from the BS, oops, I mean BLS, where you will be completely baffled with bullshit and amazed at the number of notes regarding the amount of changes transpiring in how they calculate and revise their “data:”

When we look at the Alternate Table, we find that U-6, data that most closely resembling data from the past, actually rose .2% when not seasonally adjusted, but fell only when seasonal adjustments were made:

The completely phony Birth/Death model was not as large of an influence as normal, actually subtracting 11,000 jobs versus the 6,000 add that occurred last year:

So how is the BLS getting the rate to trend lower? Simple… they fail to count people as looking for work. Then they report that their numbers are basically unchanged – read the report above – when in fact the numbers are shifting in the same direction time and again in increments they ignore but add up to huge numbers over time. This can be seen in Participation Rate and Not in Labor Force charts below:

Participation Rate:

Not in Labor Force:

And despite “improving” numbers, the Mean Duration of Unemployment is still rising, how can that be?

Mean Duration of Unemployment:

Below is the Mean Duration of Unemployment with the trumped up Unemployment Rate on the same chart. Hmmm, why is it that at no prior time in history has there been this disconnect where these two have diverged from one another so much?

Hallelujah, it must be time to name a new Saint as another miracle just occurred... Now go back up and look at that Shadow Stats chart again and note that his divergence is over the same time frame and has also never happened in the past. Hmmm. Let’s just say it’s snowing indoors and it’s getting deep.

Wednesday, January 4, 2012

Equity prices are lower this morning after yesterday’s ridiculous gap over resistance. The dollar is higher, reversing yesterday’s move, bonds are slightly lower, oil is slightly lower after moving to $104 yesterday, gold is higher, silver lower, and food commodities are slightly lower.

Speaking of food commodities, ever since the latest massive European “rescue,” food commodities have moved almost non-stop higher. In fact, corn has moved higher in 12 of the last 13 sessions, or about 15% higher in just the past two weeks!

In the past week I have begun hearing many stories about the “riches” being made in the farmland sector of real estate. In Iowa, farmland has been selling for record prices. There’s no question that foodstuff is inflating rapidly in price, much faster than advertised by our money printing central criminals at the “Fed.”

History shows that when inflation really begins to set in, the government and those in control of producing the money simply lie. That is in progress. But at some point the math of the printing begins to create pain for those in the lower income brackets where wages simply fail to keep up with the inflation. Attempts to create energy from agriculture are also losing propositions that only aggravate these effects. These result in loss of confidence and the expectation that inflation will continue. Larger and larger segments of the population fail to keep up. When this is seen, you are looking at the final stages of monetary and political control. We are getting closer and closer, keep an eye on food and farmland prices, it’s the last bubble because it will result in revolt.

The completely conflicted and hypocritical MBA says that Purchase Applications fell dramatically in the past week. Once again, worthless data with giant sized meaningless one week moves, the result of an industry that is only a fraction of what it once was and the shifting of the way they report to only report percentages without the underlying data. Here’s Econoexcuses:

HighlightsThe weeks may have been short and the seasonal adjustment difficult but mortgage application activity definitely declined during the two weeks ended December 30 (December 23 week included due to holiday). This is the conclusion of the Mortgage Bankers Association whose purchase index over the two week period fell a very steep 9.7 percent. The drop interrupts what had been a steady stream of good news out of the housing sector.

Down 1.9 percent is refinancing which makes up the great bulk of mortgage activity, at 82 percent for the highest share of 2011. Homeowners are increasingly refinancing their mortgages as rates sink. For the lowest rate of 2011, the average 30-year conforming mortgage ($417,500 or less) was 4.07 percent in the period.

“Steady stream of good news out of the housing sector?” LOL, talk about self-deluded, wow.

Supposed Factory Orders is released shortly and will be reported inside of today’s Daily Thread.

Here’s Bill Still’s latest, in my opinion one of the most on the mark discussions from Bill to date – good job, Bill!